OTC Advisory Services

Sponsor "letter of Introduction", Form 211 filings, DTC eligibility

U.S. QB or QX Listing Made Simple

Why QB or QX for Canadian Issuers

As a public company, you are likely aware of the OTC Pink Sheet market and you may even know of the OTC Grey market. On the OTC Grey market, no US investor can buy your stock. As a platform to reach investors it is pretty much useless. As such, you may have filed a Form 211 to trade on the Pink Sheet platform thinking that now US investors can trade your stock. While it is an improvement, most US brokers, advisors and investors are still restricted from buying your stock on the Pink Sheets - it is a platform where bankrupt, distressed and non-compliant companies trade.


However, there is a solution for companies listed on a Canadian Exchange and interested in a cost effective way to reach the huge pool of U.S. Retail and Institutional Investors - OTC Markets Group, QB or QX trading platforms. OTC Markets operate these SEC recognized, FINRA regulated trading platforms on which thousands of securities are traded. They provide transparency and liquidity consistent with a big board listing, but with no need to duplicate your compliance work to satisfy the SEC, and listing fees that are a fraction of the NYSE or Nasdaq.  

How is the OB or QX the Answer

Using Rule 12g3-2(b) to list International Companies on OTC QB or QX, the United States capital markets offer the greatest access to investor capital and are the most mature and stable of the world’s financial centers. Yet many companies forego the opportunity to trade their securities in the U.S. because they do not want to incur the cost of compliance with U.S. securities laws, including the Sarbanes-Oxley Act of 2002. An alternative, for international companies wanting to trade their securities in the U.S. without incurring the costs of compliance with U.S. securities laws is to utilize the 12g3-2(b) exemption under the Securities Exchange Act of 1934, (the Exchange Act), and be quoted on either OTCQB or OTCQX. International companies that are already listed on their home country exchange can use this exemption to easily have their securities quoted on either the QB or QX platforms without having to go through the registration process or needing to comply with the continuous reporting requirements of U.S. securities laws.   

The Steps

Every issuer is different but there are required steps and elective steps.

Required Steps:

  • Rule 15c2-11 under the Securities Exchange Act requires that all securities quoted on the OB/QX must complete a Form 211 by a FINRA registered market maker. If your company has yet to file a Form 211 then this your first step.
  • A letter of introduction from an OTC Markets Group qualified sponsor.

Elective Steps:

  • Obtain DTC eligibility - the depository and book-entry services of The Depository Trust Company enhances capital market efficiencies and reduces costs to those trading in your stock
  • US based Corporate Communications and IR Services - the adage "Build it and they Will Come" does not always hold true and reaching the investors that can now trade in your stock may require the use of U.S.  based communication experts to facilitate broker and investor meetings and presentations.